Frequently Asked Questions about Long Term Care Insurance

Long term care refers to the services provided to people who have difficulty managing the activities of daily living due to illness, injury, disability, cognitive disorder or aging. Long Term Care Insurance (LTCI) coverage helps pay for the high cost of care when one needs assistance with the activities of daily living, which includes bathing, dressing, toileting, transferring (such as from a bed to a chair), continence, eating or a severe cognitive impairment.

LTCI coverage offers more control over how you may live your life if you need assistance with the activities of daily living because of injury, aging, illness, or cognitive impairment. It provides the financial resources you may need to choose the location and type of care you receive. LTCI coverage helps to pay for care you may need.

Many people assume that family members will take care of them if they need long-term care. However, even the most dedicated family members will not likely be available 24 hours per day, seven days per week for a long period. Having a long term care plan in place can help cover the cost of receiving care at home when family members are away. Long term care also can make it possible for you to receive daily care without having to rely on family or friends. With LTCI coverage, you can make decisions that are right for you and your family. In some cases, an LTCI contract may pay for the training of a family member to provide care.

Long term care is different from other health care and is not typically covered by health insurance, Medi-Cal, Medicare or Medicare supplemental policies. Medicare and Medi-Cal cover very limited long-term care services. Medicaid and Medi-Cal are only available for low-income recipients. Medicare benefits will be exhausted after 90 days of care for qualifying medical events.

Young or old, people require long-term care for a variety of reasons. At any age, whether it is due to an accident or illness, health-related impairments can change everything. While you may not need long-term care until you have advanced in age, your premiums are lower the earlier you get started.

Not everyone is able to save enough money to cover the high cost of long-term care. Without coverage, paying for long-term care can quickly deplete even sizable savings. Being able to set aside $500,000 may not be enough. Conditions like Parkinson’s or Alzheimer’s can last 10 years at the cost of $100,000 or more per year.

Historical data shows that, on average, Long-Term Care recipients spent 3.4 years needing assistance. About one percent required long-term care for more than 10 years.

Premiums depend on the age of the applicant as well as medical condition. A mostly healthy 50 year old may be able to purchase a contract worth $300,000 for less than $250 a month for a traditional style contract. Hybrid policy’s premiums have a wide range of payment options as the contract can be set up to be ‘paid up’ in a specific period.

Your coverage does not expire unless you exhaust your total coverage or choose to terminate your plan. For example, you may need long term care for six months and use up $60,000 of your $300,000 of long term care money and then recover to normal activities. You would still have $240,000 for use in the future. 

With a ‘traditional style’ plan, your premiums could increase in the future under certain circumstances, but only after approval by the Department of Insurance or CalPERS. If you cannot afford the increase, or do not want to accept the premium increase, you may be given the option to adjust your coverage to an amount that would let you maintain or lower your existing premium.

‘Hybrid policies’ will never increase because they are life insurance policies with an LTC rider. Hybrid contracts also provide for the policy to be ‘paid up’ after a limited number or paid up with a single premium. The policies can also provide for 100% return of premium if it is no longer needed and can pay as a life insurance policy if death occurs and LTC is never used

Many LTCI contracts offer an optional benefit for the return of premium at death. If you select this optional benefit and die before your total benefits are used up, all or a percentage of your premiums will be returned to your estate, minus any benefits paid.

A joint federal-state policy intended to promote the purchase of private long term care insurance and expand access to policies to pay for long term care services. The benefit is described as a ‘dollar-for-dollar’ asset disregard or ‘spend down protection’.  The amount of long term care insurance adds to the protection of assets from the Medicaid recovery rules.

Many contracts can be obtained that cover both spouses/partners in a significant relationship. These are called ‘shared care’ provisions. This can help reduce the premium and can double the coverage for one of the members if needed.

Most LTCI contracts have inflation protection as a rider. Medical care cost continue to go up. Inflation protection increases the benefit amount by the percentage chosen. Generally, the protection ought to be between 3% and 5%.